469 U.S. 256 (1985), 83-240, Lawrence County v. Lead-Deadwood School District No. 40-1

Docket Nº:No. 83-240
Citation:469 U.S. 256, 105 S.Ct. 695, 83 L.Ed.2d 635, 53 U.S.L.W. 4063
Party Name:Lawrence County v. Lead-Deadwood School District No. 40-1
Case Date:January 09, 1985
Court:United States Supreme Court

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469 U.S. 256 (1985)

105 S.Ct. 695, 83 L.Ed.2d 635, 53 U.S.L.W. 4063

Lawrence County

v.

Lead-Deadwood School District No. 40-1

No. 83-240

United States Supreme Court

Jan. 9, 1985

Argued October 30, 1984

APPEAL FROM THE SUPREME COURT OF SOUTH DAKOTA

Syllabus

The Payment in Lieu of Taxes Act compensates local governments for the loss of tax revenues resulting from the tax-immune status of federal lands, such as wilderness areas and national parks, located in their jurisdictions, and for the cost of providing services associated with these lands. The Act in 31 U.S.C. § 6902(a) requires the Secretary of the Interior to make an annual payment to each unit of local government in which such lands are located, and further provides that the local unit "may use the payment for any governmental purpose." A South Dakota statute requires local governments to distribute federal payments in lieu of taxes in the same way they distribute general tax revenues. Since appellant county allocates 60% of its general [105 S.Ct. 696] tax revenues to its school districts, the state statute would require the county to give its school districts 60% of the § 6902(a) payments it receives. After the county refused to distribute the funds in accordance with the state statute, claiming that § 6902(a) gave it the discretion to spend the federal funds for any governmental purpose it chose, appellee School District filed a mandamus complaint in a State Circuit Court, seeking to compel the county to distribute the federal funds in accordance with the state statute. The Circuit Court held that the state statute conflicted with federal law, and was therefore invalid under the Supremacy Clause. The South Dakota Supreme Court reversed, holding that the only limit § 6902(a) imposed on a local government is that the federal funds must be used for a "governmental purpose," and that, since support of school districts is a valid governmental purpose, the state statute was consistent with federal requirements.

Held: The state statute is invalid under the Supremacy Clause. Pp. 260-270.

(a) The language of § 6902(a) appears to endow local governments with the discretion to spend in-lieu payments for any governmental purpose. At the very least, the statute is ambiguous with respect to the degree of such discretion. But the Department of the Interior has consistently taken the view that local governments retain the discretion to spend the in-lieu payments for any governmental purpose they choose. And the legislative history evidences a congressional purpose to ensure that such payments would reach and be placed at the disposal of the

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affected local governments to spend as they see fit. The South Dakota statute runs directly counter to this purpose. Pp. 260-268.

(b) The South Dakota statute's intrusion on a county's discretion in spending § 6902(a) funds would not be negligible or even modest. To allocate such funds in the same proportion as local revenues would most likely result in a windfall for school districts and other entities that are already fully funded by local revenues, and the federal money would thus not serve its intended purpose of compensating local governments for extraordinary or additional expenditures associated with federal lands. As to any concerns of federalism, the Federal Government has not presumed to dictate the manner in which counties may spend state in-lieu-of-tax payments, but, rather, has merely imposed a condition that counties should not be denied the discretion to spend § 6902(a) funds for any governmental purpose. Pp. 269-270.

334 N.W.2d 24, reversed.

WHITE, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, MARSHALL, BLACKMUN, POWELL, and O'CONNOR, JJ., joined. REHNQUIST, J., filed a dissenting opinion, in which STEVENS, J., joined, post, p. 270.

WHITE, J., lead opinion

JUSTICE WHITE delivered the opinion of the Court.

The issue presented in this appeal is whether a State may regulate the distribution of funds that units of local government

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in that State receive from the Federal Government in lieu of taxes under 31 U.S.C. § 6902. The Supreme Court of South Dakota sustained a state statute requiring local governments to spend these moneys in the same manner as they distribute taxes, holding that it was not inconsistent with the federal law. Because the language and legislative history of the federal statute indicate that Congress intended local governments to have more discretion in spending federal aid than the State would allow them, we hold that the state statute is invalid under the Supremacy Clause. Hence, we reverse.

I

The Payment in Lieu of Taxes Act, 31 U.S.C. § 6901 et seq.,1 compensates local governments for the loss of tax revenues resulting from the tax-immune status of federal lands located in their jurisdictions, and for the cost of providing services related to these lands. These "entitlement lands" include wilderness areas, national parks, and lands administered by the Bureau of Land Management.2 Under § 6902, the Secretary of the Interior is required to make annual payments "to each unit of general local government in which entitlement land is located."3 The local unit "may use the payment for any governmental purpose." 31 U.S.C.

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§ 6902(a).4 Appellant Lawrence County has received in excess of $400,000 under the Act.

In 1979, South Dakota enacted a statute requiring local governments to distribute federal payments in lieu of taxes in the same way they distribute general tax revenues. S.D.Codified Laws § 5-11-6 (1980).5 Since the county allocates approximately 60% of its general tax revenues to its school districts, the state statute would require the county to give the school districts 60% of the § 6902 payments it receives. The county, however, declined to distribute the funds in accordance with the state statute, claiming that the Payment in Lieu of Taxes Act gave it the discretion to spend the funds for any governmental purpose it chose.

This state court litigation arose after the county's federal court challenge to the state law was dismissed on jurisdictional grounds.6 Appellee Lead-Deadwood School District

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No. 40-1 then filed a complaint in state court, seeking a writ of mandamus to compel the county to distribute the federal funds in accordance with the state statute. The Circuit Court for the Eighth Judicial Circuit of South Dakota held that the state statute conflicted with federal law and was therefore invalid under the Supremacy Clause.

The South Dakota Supreme Court reversed. 334 N.W.2d 24 (1983). The court noted that the only limit imposed on the local government by § 6902 is that the funds must be used for a "governmental purpose." Since support of school districts is a valid governmental purpose, the [105 S.Ct. 698] court concluded that the state statute was consistent with federal requirements. The court therefore found it unnecessary to go behind the plain language of the statute and examine its legislative history. Two justices dissented, concluding that the statute as a whole, along with the legislative history, indicated that Congress was directing the States to "keep their noses out of the manner in which a county would distribute these funds." Id. at 27. We noted probable jurisdiction, 466 U.S. 903 (1984).

II

Even if Congress has not expressly preempted state law in a given area, a state statute may nevertheless be invalid under the Supremacy Clause if it conflicts with federal law or "stands as an obstacle to the accomplishment of the full purposes and objectives of Congress." Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 248 (1984); Hines v. Davidowitz, 312 U.S. 52, 67 (1941). In determining whether the state statute at issue here impeded the operation of the federal Act, the South Dakota Supreme Court limited its inquiry to whether the funding of school districts was a "governmental purpose." Concluding that it was, the court found no inconsistency between the state and federal provisions. This plain language analysis, however, is seriously flawed.

The Act provides that "each unit of general local government" -- in this case, the county -- "may" use the moneys for

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"any" governmental purpose. This language appears to endow local governments with the discretion to spend in-lieu payments for any governmental purpose. It seems to say that, if the local unit chooses to spend all of the money on roads, for example, it could do so. Under the state statute, however, that is forbidden: the funds must be allocated among the various services in the same manner as other revenues. The State insists that since money used as the law directs would be spent on proper governmental services, there is no inconsistency with § 6902. Under this interpretation, the word "may" confers no discretion on local governments that is immune from state control. The last sentence of § 6902(a) is drained of almost all meaning, since had it been omitted, the legal position of local governments would be precisely as described by the South Dakota Supreme Court. The sentence would become a mere admonition not to embezzle and to spend federal money on proper purposes. At the very least, § 6902 is ambiguous with respect to the degree of discretion it confers on local governments. Contrary to the views expressed in the court below, it does not of its own force dispose of the county's case. Resort to other indicia of the meaning of the statutory language is therefore appropriate.

First, we note that the Department of the Interior, the agency charged with administration of the Act, has consistently adhered to the view that local government units retain the discretion to spend the in-lieu payments for any governmental purpose they choose. In 1977, soon after the Act was passed, the Department promulgated 43 CFR § 1881.2 (1983), which provides that "[t]he monies paid to...

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